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Liquidity Aggregation Solutions

1inch

Launched in 2019, 1inch is an MLA that supports Ethereum, Ethereum rollups (Optimism and Arbitrum), and several EVM-compatible blockchains like Binance Chain, Polygon, Fantom, and Avalanche for a total of 10 different blockchains. In total, 1inch sources liquidity from ~200 sources in an attempt to provide the lowest cost trade possible. Aggregators like 1inch allow arbitrage traders to easily find pricing differences between multiple exchanges and exploit them while also reducing mispriced trading pairs across the ecosystem. 

Currently, 1inch is the dominant aggregator on Ethereum mainnet with ~$5B in monthly volume, ~100,000 users per month, and nearly 85% of all Ethereum aggregator volume.

Despite comprising over 50% of total trading activity and ~95% of wallets on 1inch, retail users accounted for less than 2% of the total trading volume on 1inch in Q3 2022. Less than 1% of wallets were responsible for almost 60% of trading volume, suggesting that whales are the primary users of 1inch.

Pathfinder

The 1inch Network utilizes its Pathfinder algorithm in order to route trades in the most efficient and cost-effective manner. Pathfinder is designed to:

• find the cheapest token swap price
• split a large transaction into several smaller sub-transactions (if necessary), and
• use separate order depths from various protocols

Due to Pathfinder’s dynamic order-filling mechanism, 1inch also helps reduce the likelihood a large transaction fails due to inadequate liquidity. Once a transaction is split across multiple liquidity sources, Pathfinder enables the ability to switch or cancel any liquidity source that is unfavorable compared to the rest. This means only the portions sourced from the most economically-favorable liquidity pools are used. All of these options can easily be toggled from the swap interface. Despite the 100+ liquidity sources, Uniswap and Curve remain the predominant protocols through which trades are routed.

Additional Features

In H2 2020, 1inch released a native AMM, enabling users to provide liquidity and earn passive liquidity mining rewards. In Q2 2021, the Limit Order Protocol (LOP) was released, supporting conditional limit and stop-loss orders with no fees. All three protocols are governed by the 1inch DAO using the network’s native 1INCH token.

As of H2 2022, 1inch has created a mechanism to safeguard users from front-running attempts and sandwich attacks. The tool, dubbed Rabbithole, features a special RPC API that enables users to send swap request transactions directly to validators, as opposed to having them queue at Ethereum's public mempool where MEV specialists could look to benefit. Typically, validators could reorder and reprioritize certain transactions over others in order to maximize their MEV-based profitability.

Finally, 1inch now supports multiple wallets/dapps like Metamask, Zerion, Wirex, Orange, and D’Cent.

Orion Protocol

Orion Protocol is a chain-agnostic technology that creates an aggregated entry point into the crypto market. Orion is powered by its in-house Universal Liquidity Aggregator that provides seamless and decentralized access to many different CEXs, DEXs, swap pools, and other applications in one protocol. The Orion Bridge works as a peer-to-peer atomic swap bridge that lets users trade native assets across different blockchains. This lets users take advantage of a form of aggregated cross-chain liquidity with the goal of enabling economic interoperability.

Orion Protocol operates the Orion Bridge in collaboration with the Orion Terminal, a user interface that offers multiple utilities through compatible digital wallets, such as:

• Bridging of assets
• Swapping
• Staking
• Trading

Additionally, the terminal gives users the ability to leverage its NFT aggregator and portfolio management tools, helping Orion become a single source of interoperable economic activity for users.

Other services offered by Orion include:

• Orion Protocol dApp store
• Enterprise Trade: widget
• Liquidity Boost plugin for exchanges
• DEX launcher
• Launchpad liquidity

Orion functions through the use of atomic swaps, automated exchange contracts that facilitate the trading of assets between parties on different blockchains. This form of swap allows for the immediate exchange of two assets without using wrapped tokens (equivalent assets of a particular token, e.g., BTC to WBTC). Any two assets that have atomic swap support can be traded between two parties. So, for example, consider that BTC and ETH both have atomic swap support. A user on chain A can facilitate a trade with a user on chain B using atomic swaps.

For the Orion Protocol, atomic swaps are possible using the HTLC method. These HTLCs are created when a trade is initiated, ensuring the process can automatically be executed trustlessly and efficiently between the two parties. Orion being peer-to-peer means any two parties can leverage HTLCs and execute a swap of supported digital assets. In other words, each user serves as the custodian of their assets and can freely execute trades with other willing peers at any time.

Orion functions through its own unique governance model called Delegated Proof-of-Broker (DPoB). This model is built on an existing network of brokers and token stakers using the native token to the Orion Protocol, ORN. The broker network works to actively secure all existing tools and technologies on the network, including that of the cross-chain Orion Bridge.

DPoB works as a network that underpins the entire Orion ecosystem. Brokers serve to sign and verify messages submitted by users. Brokers enable immediate cross-chain trading of assets and have no ability to refuse orders, block funds, or access user accounts. The entire system is operated by secure, strict smart contracts to continuously enforce decentralized conditions. When a user submits an order, it's then committed to exchange the desired assets within the parameters outlined by the order itself. This order can't be altered by any other parties. 

Orion Protocol has also made a sizable integration with the Binance Bridge. This has elevated the Orion ecosystem’s utility and lets users trade across much of the greater Ethereum ecosystem via Binance Smart Chain (BSC).

Orion aims to establish true cross-chain decentralization via its peer-to-peer-based models, allowing users to directly exchange cross-chain value amongst themselves without having to rely on a (potentially centralized) third-party service provider. The trust factor associated with Orion does come from its designated brokers but is theorized to reduce the risk of 51% attacks. Without the direct reliance on validators, Orion is hypothetically less prone to traditional exploits of other cross-chain bridge models.

In addition to the broker model, a downside of Orion in this instance is the necessity to transact in ORN tokens. While it provides a value-add to the Orion ecosystem, it does create an additional layer that users and security providers must navigate. Orion is also quite limited in scope, acting as an aggregator rather than a full-on atomic swap bridge, with compatibility only between Ethereum and BSC.

Risk introduced to the Orion ecosystem may originate from the brokers themselves, as demonstrated in the KuCoin hack. This also showed users there are potential centralized powers from the Orion team itself, shown when they updated protocol smart contracts to render the $8.5 million in tokens hit in the 2020 KuCoin hack obsolete. Other than these potential risks, users can benefit from relatively tighter security guarantees than other blockchain bridge models. This comes with users having to sacrifice network options.

Rango Protocol 

Rango is an example of a cross-chain DEX aggregator. It combines the models and technologies of on-chain DEX aggregators, such as 1Inch, with cross-chain liquidity providers, such as THORChain, to improve the users’ accessibility to liquidity. Rango has also placed emphasis on efficiently calculating complexity in cross-chain transactions without the complexity being visible in the protocol’s UI, helping to make the platform more user-friendly.

In total, Rango manages to connect 40 separate blockchain networks, 100 decentralized exchanges, 10 different cross-chain bridges, and six wallet integrations. This makes Rango one of the most sophisticated and diverse aggregators available within the blockchain industry to date.

To manage such a diverse ecosystem, Rango has implemented its own back-end technology to actually connect chains and facilitate transactions for users. This is made possible via Rango’s off-chain API built for decentralized applications and compatible wallets, which then plots the best possible routes for cross-chain transactions. With so many blockchains and DEXs integrated, this can be a very complex process. 

Specifically, the Rango API fetches balances, assets, and all other necessary data to plot the appropriate transaction roots and create trades for users. The protocol itself attempts to optimize user experience, efficiency, and cost. Additionally, the transactions API module handles checking preconditions and balances while the tracking API tracks blockchains and any relevant smart contracts. These systems working together enables the Rango aggregator to function properly. 

In many respects, Rango is similar in product and design to 1Inch, one of the most popular aggregators. Like 1Inch, Rango aggregates everything from blockchains, including Ethereum, BSC, Polygon, and others. The key difference in model designs is found in the addition of aggregated cross-chain/in-chain services from existing blockchain networks as well. This literally lets users fast-travel the entire crypto ecosystem while aggregating for the cheapest, most efficient pathways.

Rango uses a non-custodial model to ensure that user funds always stay with the users, removing Rango from the equation for fund management. Users access and use Rango entirely from their own wallets, giving the user custody over swaps, transactions, and other actions. Attack vectors on cross-chain technology typically occur within smart contract exploits. 

Due to the complexity of the protocol and heightened risk associated with developing smart contracts, Rango opted to use audited models from entities, such as 1Inch, Uniswap, and others, including them directly in the aggregator. The main avenue of centralization is found within the routing process itself. The Rango protocol is responsible for handling the routing on the backend due to the lack of smart contracts. So, users must trust that the Rango protocol is finding the most efficient pathways to execute cross-chain transactions.

An additional concern is in what the aggregator is actually including. The protocol doesn’t vet every blockchain bridge, DEX, and other application. So, when bridges or other technologies do have a problem and get exploited, Rango users can still be caught in that vulnerability. For example, two bridges that saw major hacks, Wormhole, and Anyswap, are both integrated with Rango. However, per Rango’s documentation, this risk should be minimal as user funds are supposed to always remain in the user’s own wallet. Users always hold the power to review all actions prior to executing them.

As Rango strives to integrate as many chains as possible, a long list of chains has already been implemented with the goal of connecting more over time. With these chains, the vast majority of coins and tokens can be transacted and traded through Rango.

The following list represents blockchain networks integrated with Rango:

• Bitcoin 
• Bitcoin Cash
• Litecoin
• Solana
• Arbitrum 
• Aurora
• Avax
• Boba 
• BSC
• Cronos
• Ethereum
• Evmos
• Fantom
• Fuse
• Gnosis
• Harmony
• Heco
• Moonbeam
• Moonriver
• OKC
• Optimism
• Polygon
• Akash
• Binance Chain
• BitCanna
• Chihuahua
• Comdex
• Cosmos
• Crypto.org
• Desmos
• IRISNet
• Juno
• Lum Network
• Osmosis
• Persistence
• Regen
• Sentinel
• Stargaze
• Starname
• Sifchain
• Thorchain

Source

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